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SURVEY PROFILES POPULATION BARCLAYS SAYS REPEAT MODS OF SINGLE-FAMILY RENTERS ARE ON THE RISE The fast-growing population of singlefamily renters is more likely to dwell in their home for longer periods of time compared to multifamily occupants, which suggests demand for single-family rentals offers greater stability than the multifamily market, according to the results of a new survey from Premier Property Management Group. The survey of renters showed 26 percent of single-family renters are more likely to stay in their current home five or more years compared to 22 percent of apartment dwellers. One reason single-family renters might be more prone to stay longer is their satisfaction with property management, according to the survey. For example, 84 percent of single-family renters said management was either good or exceptional, while 69 percent of multifamily tenants offered the same feedback. Single-family renters were also characterized as earning more income, and they are more likely to have a bigger household. The survey found the median income for single-family renters to be $75,000$100,000 compared to $50,000-$75,000 for multifamily tenants. Regarding household size, 65 percent of single-family renters have a household of three or more compared to 32 percent of apartment households with three or more members. Single-family renters also placed greater importance on schools and parks in the area, with 84 percent and 71 percent, respectively, stating those factors are important. Among apartment renters, 71 percent said good schools were important and 61 percent said parks were important to them. Chris Clothier, director of sales and marketing and partner of Premier Property Management, explained single-family rentals provide families with the same aspects associated with owning, such as living space, privacy, safe 46 neighborhoods, and a sense of community—all without the costs and risks of homeownership. "Single-family rentals can be found in virtually every community today and more and more families are choosing single-family rentals either as a temporary stop on the road to becoming homeowners or as a permanent solution to their housing needs," he said. Clothier also added single-family rentals act as a "sanctuary" for large numbers of families displaced by foreclosure who plan to buy again when they can afford to do so. Sixty percent of single-family renters say they anticipate becoming homeowners within five years compared to 44 percent of apartment tenants who have plans to own. According to the survey, a preference for the lifestyle renting offers rather than a lack of financing was the main reason single-family and multifamily tenants are not owners. Among single-family renters, 42 percent said they were not likely to become a homeowner in five years because they enjoy renting, while 39 percent said it was because they can't get a mortgage. For multifamily occupants, 43 percent said they simply don't want to own, while 31 percent said they can't get a mortgage. In a separate study, CoreLogic found that renters across the country are less likely to default compared to a year ago, but the risk of not fulfilling lease obligations increased on a quarterly basis. CoreLogic's SafeRent Renter Applicant Risk (RAR) index stood at 103 in Q 4 2012. (An index value above 100 indicates less risk.) The fourth-quarter index reader rose from 101 in Q 4 2011, but was down from 106 in Q 3 2012. "The increased risk from the third quarter to the fourth quarter of 2012 reflects a riskier applicant pool that is typical in seasonally slower periods of applicant traffic," CoreLogic explained. The pace of modifications is slowing compared to the 2010 peak, but repeat modifications are on the rise, according to a recent research report from Barclays. Not only are mods returning for seconds, but researchers from Barclays found re-modifications perform worse than first-time mods. In its report, Barclays revealed about 40 percent of recent subprime modifications and 10-20 percent of modifications among other loan products have been modified before. Barclays gave three reasons for the rise in repeat mods: first-time mods did not reduce payments enough, leading to higher re-defaults; servicers are taking advantage of the Principal Reduction Alternative (PRA) under the Home Affordable Modification Program (HAMP); and servicing transfers are leading to an increase in re-modifications. Barclays explained that many early mods redefaulted in 2011, with some having very small or no payment reductions when first modified. However, even loans with significant payment reductions initially were in need of a second mod. "Somewhat surprisingly, we find that a quarter of the re-mods are offered on loans that have already been offered a payment reduction of more than 40 percent in their prior modification," Barclays stated in its report. The firm's research team also revealed about 75 percent of re-mods occurred at least 18 months after the previous modification, and about a quarter of those re-mods were given to borrowers who were current. Barclays also stated nonbank servicers such as Ocwen Financial and Nationstar Mortgage tend to have about twice the share of re-mods as their bank counterparts. Banks, on the other hand, are more likely to pursue a short sale, according to the report. As more loans are transferred to nonbank servicers, Barclays expects the rate of re-modifications to increase. Barclays found that repeat mods perform more poorly than first-time mods, with the remod redefault rate at about 55 percent after 18 months compared to a first-time mod redefault rate of about 40-45 percent. "This is an indication that re-modification is a negative signal on the borrower's equity and/ or ability to pay," Barclays explained. Barclays added that servicers likely to re-modify may also be less selective when offering mods.

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